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Investor Insight: How to invest in the U.S.A

Investors are focused on getting into U.s. properties -- from acquisition costs to cap rates. But they're not so good on formulating an effective exit plan to sell and capitalize on equity gains, says leading investment advisor Richard Dolan of U.S. Property Shop.

Richard Dolan, US Property ShopRichard Dolan: So given today’s market place, Canadians have been often summed up in 3 Cs. They are cheap, they are conservative and we are chicken and as a fellow Canadian I can actually agree with that. But as we have seen now more than ever before, Canadians understand for four real true phenomenons unravelling as we speak, when it comes to the US real estate market.1. These currencies are at par.2. Interest rates are low.3. We know that this discounted real estate market isn’t going to be forever.

But number 4 is this proximity of comfortability, meaning that Canadians look to Florida or Arizona because they have been there, they vacationed. And knowing that the youngest baby boomer is now 45 and eldest 65, a buy down south makes sense now than ever before. Canadians, notoriously love safe, simple and cash flowing investments. That’s why the US real estate opportunity has presented well those 3 in one.

Here you have people who have been foreclosed on in America over the past 3 years and as a result they need to rent somewhere, they got a place to live. So Canadians moving in as landlords with turn key property management and tenants already in place are seeing themselves making cash on cash returns of 6, 8 even 12 per cent. And that’s particularly why and specifically why Canadians are looking at real estate in America, more than now than ever before. That opportunity won’t be forever. Why? Because the World is buying opportunity where residential cash flowing properties exist.

For most Canadians, it is not so much how they get into an investment. It is more or less how do they get out at a profit. Will Rogers once said it best, “it’s not the return on my money I am interested in, it’s the return of my money.” And so as a result this topic and frame of mind is something that I am sensitive to as a Canadian, as a real estate analyst, as a researcher in this field of US real estate to help Canadians at the upcoming Toronto Investor Forum to understand what you need to buy, how to buy it, but then how to get out at a profit. So, this month in April 2012 I definitely encourage all Canadians looking at US real estate as an opportunity to get the Canadian’s perspective on all things US real estate, not just getting your profit going in, but staying cash flow positive coming out.